Today’s budget proposals started taking shape last summer

PIERRE – The speech this afternoon by Gov. Dennis Daugaard, outlining his budget recommendations to the Legislature for the 2014 fiscal year that starts July 1, 2013, is actually the mid-point of an annual process that takes more than six months to piece together the final version of the budget each year and represents a big gamble on predicting the economy far in advance.

The budget recommendation process begins in the summer when state government agencies develop their budget requests.

Those are submitted to the state Bureau of Finance and Management, which is the governor’s budget office, for review.

The next big step, where we currently are, is the governor’s recommendations in late November or early December to the Legislature.

The process ends at some point in late February or early March, when the Legislature formally approves the final version in the closing days of the legislative session.

Along the way the state finance commissioner, Jason Dilges, also tries to form the most accurate forecast possible for the economy a full year or more in the future and determine how state tax revenues will be affected.

That act of crystal-balling includes conferences with members of a state advisory team as well as individual conversations with international consultants and with representatives from businesses that are key pieces in South Dakota’s economy, such as credit-card banks.

Later, usually as late as possible in February, a panel of legislators engage in their version of the same leap of faith, taking revenue forecasts from the Legislative Research Council’s fiscal staff and from BFM, and making a final official estimate of how much revenue state government will receive during the next 16 months.

This is why the Legislature waits to pass the budget as one of its last acts each session.

Daugaard’s recommendations today remained somewhat of an official mystery until the 1 p.m. speech. Unlike previous governors, he doesn’t provide advance briefings to statehouse reporters. His policy is that the Legislature should hear his message first.

South Dakota Public Broadcasting sent a team of radio and television reporters and technicians to the Capitol to provide live coverage of the speech and gather reactions from legislators afterward.

An archived digital copy of the coverage will be available later today at www.sdpb.org on the Internet.

State law requires that all budget requests be submitted to BFM no later than Oct. 15. State law further requires the governor to submit budget recommendations to the Legislature annually no later than the first Tuesday after the first Monday in December.

The process begins long before October, however. After the governor and BFM receive the agency budget requests, there is a series of private internal meetings involving the governor’s and BFM staff with leaders from each agency.

Eventually final numbers are settled on as the governor’s formal recommendations. Those are set within the framework of the BFM revenue forecast.

The budget proposal then goes through the legislative process, starting in January, as an official bill, similar to other pieces of legislation.

Unlike special appropriations, which deal with a single subject and need a two-third majority in both the Senate and the House of Representatives, the budget legislation – known as the General Bill – needs only a simple majority in each chamber.

The current 2013 budget took effect July 1, 2012, and runs through June 30, 2013. It was pieced together during a 25-day schedule of public meetings in January and February by the Legislature’s Joint Committee on Appropriations and many more uncounted discussions behind the scenes.

The panel has nine senators and nine representatives. Those 18 lawmakers hold almost exclusive power over the final version of the budget. Rarely has a legislator been allowed to amend the General Bill during the final consideration by the full Senate or the full House of Representatives.

The fiscal 2013 legislation, Senate Bill 197, received final passage in a pair of votes on March 2, winning Senate approval 24-5 and House approval 50-18. That was after a lengthy final hearing by the committee on the final amendments.

For the recommendations being delivered today by the governor, nearly all state agencies faced an Aug. 31 deadline to submit their budget requests. The Unified Judicial System had a later deadline of Oct. 12.

BFM held its internal hearings during September. BFM staff met with the governor Nov. 8, but he didn’t make his final decisions until Nov. 28 — last Wednesday — according to Dilges. One step was left.

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